The body representing major pharmaceutical companies in Ireland has hit back at criticism that medicines in Ireland are too expensive.

The Irish Pharmaceutical Healthcare Association (IPHA), says the complaint that medicines are too expensive must be put into context and points out that the ex-factory price of new medicines in Ireland is set to fall.

"The cost of developing a medicine is an expensive process, and companies must recoup this investment if they are to be able to continue to develop innovative medicines for patients," IPHA said.

It said the discovery, development, testing and gaining of regulatory approval for new medicines has become an even more highly complex, lengthy, risky and expensive process in recent years.

In a briefing document, IPHA says on average, only one out of every 10,000 promising substances will successfully pass extensive testing in the research and development phase to be approved as a marketable product.

It adds that it takes about 10-15 years to develop one new medicine from the time it is discovered to when it is available for treating patients. The average cost of developing a medicine is now €868 million.

However, this does not necessarily explain why drugs in Ireland tend to be more expensive than in some many EU countries, for example, Spain.

An IPHA spokesperson told irishhealth.com they accept there are some price anomalies, particualrly in relation to older medicines; however, the gap in price between Ireland and other countries in terms of new medicines is narrowing, he said, and steps have been taken to reduce the cost of older medicines in Ireland.

He pointed out that following a recent agreement on drug costs between the industry and the Department of Health/HSE, the ex-factory price of new medicines in Ireland is linked with those in nine other EU countries, including Spain, and this will serve to narrow the price gap.

IPHA says it has been agreed that the price of new medicines coming onto the market will be reviewed in future so that they remain in line with prices in the other nine EU states, and the first of these reviews will take place on September 1 this year.

The prices of older, patent-expired medicines were reduced by 20% last March and are due to fall by a further 15% in January 2009 under the agreement on drug prices with the Department of Health/HSE, IPHA points out.

IPHA points out that pharmaceutical companies are only responsible for the price of a medicine when it comes out of the manufacturing plant. Additional cost factors include the wholesale margin, VAT and the pharmacy margin.

As regards Spain, which is the comparator usually used by health consumers in complaining about the relatively high price of drugs in Ireland, IPHA claims there are a number of reasons behind the relatively low cost of drugs in Spain.

These include the lower cost of living there, lower wholesale and pharmacy margins, and an emphasis on older, generic medicines in Spain, rather than on encouraging innovative treatments.